A U.S. government body that looks into complaints of dishonest behavior acknowledged that it was looking into multiple cryptocurrency companies for "possible misconduct."
A representative for the Federal Trade Commission declined to identify the companies or specify precisely what acts sparked the inquiries. The inquiry was allegedly related to deceptive advertising, according to a report, although the FTC spokesman would not confirm this.
"While we can't comment on current events in the crypto markets or the details of any ongoing investigations, we are investigating several firms for possible misconduct concerning digital assets," the spokesperson said.
In light of this year's dramatic decline in bitcoin's value, the spectacular collapse of FTX recently sent new shockwaves across the cryptocurrency sector. The Securities and Exchange Commission has cracked down on celebrity endorsements.
Reality TV star Kim Kardashian was accused of promoting a cryptocurrency token on her Instagram account without properly disclosing that she had been compensated, in violation of regulations requiring disclosures from those promoting securities.
NBA point guard Stephen Curry and NFL quarterback Tom Brady were reportedly among a group of celebrities under investigation by the Texas financial regulator in November for their promotion of the now-bankrupt cryptocurrency exchange, FTX.
The FTC is a free-standing American government organization that was established with the mission of defending the general public against dishonest or unfair corporate practices. A warning concerning a cryptocurrency scam with three essential elements-an impostor, a QR code, and a crypto ATM where the victims are instructed to transmit money-was distributed earlier this year.
Additionally, a report dated June 6 that as much as $1 billion in cryptocurrency had been lost to fraudsters throughout the year and that nearly half of all scams relating to cryptocurrencies in 2021 originated through social media sites. The FTC was contacted by Cointelegraph for comment, but no response had been received by the time this article was published. Several financial watchdogs and enforcement organizations throughout the world have also been aggressively attempting to stop misleading cryptocurrency ads.
Truth in Advertising, a consumer protection organization located in the US, accused 19 celebrities of endorsing nonfungible tokens (NFTs) without disclosing their affiliations to the businesses they were endorsing.
The crypto business has also been warned about misleading advertising practices by Australia's financial authority. ASIC (Australian Securities and Investments Commission) filed a civil lawsuit in October against BPS Financial Pty Ltd (BPS), an Australian company, for allegedly making "misleading" claims about its Qoin cryptocurrency.
The FTC has also pursued businesses that claimed to be involved in cryptocurrencies but were actually frauds, according to allegations.
